CP scraps PRB buildout, will take 4Q write-down

When Canadian Pacific acquired the Dakota Minnesota & Eastern railroad in 2007, it also acquired the option to build a 260-mile extension of DM&E’s network into Powder River Basin coal mines, a plan on which DM&E had begun work several years earlier.

CP, saying that it intends “to defer indefinitely plans to extend its rail network into the PRB coal mines based on continued deterioration in the market for domestic thermal coal, including a sharp deterioration in 2012,” on Monday Dec. 3 announced it will take a fourth quarter pre-tax non-cash write-down of approximately $180 million ($107 million after tax) on its PRB option.

Components of the charge include the option, engineering design costs, land, and capitalized interest.